The sudden hike in taxes was caused by the failure of the government's financing strategy, former Finance Minister Ibrahim Ameer said today.
Speaking at a press conference held by the opposition Maldivian Democratic Party (MDP) Economic Committee, Ameer said officials of the incoming government guaranteed during the transition phase after last year's presidential election that USD 600 million financing had been arranged for the supplementary budget and this year's budget
"We also spoke to the transition committee of the government then headed by the current Finance Minister, who said USD 200 million would be added to the proposed supplementary budget in 2023. They mentioned USD 400 million for the 2024 budget," he said.
The government announced green signals and assured the people that assistance from the International Monetary Fund (IMF) was not required, but these claims were not true, Ameer said.
He added that letters from the President have been sent to various leaders, but the government has been unsuccessful in securing financial assistance from any of these countries.
The former Finance Minister predicted that the government would not be able to raise money for the budget of 2025.
MDP is against raising taxes to raise revenue while the government continues spending as usual without implementing any cost-cutting measures.
"On behalf of the MDP, we want to emphasize that we are against raising taxes without cutting spending. And I would like to point out that even if taxes are raised without cutting spending, there is no benefit it will bring to the economy and managing finances," Ameer declared.
The first step to cut costs is to reduce the number of political positions, he said. Sharing some statistics on the number of political positions, Ameer said government documents show that there are 2,280 people in political positions.
Noting that this is 1,580 more than the promised 700 political posts, Ameer said the government is spending MVR 40 million a month and MVR 480 million every year to pay the salaries of the additional political employees.
He alleged that the government's claim that firing 228 people or 10 percent of those in political positions could save MVR 5 million each month was a statement to deceive the public.
The government has decided to increase taxes and fees related to the tourism industry. The TGST will be increased from 16 percent to 17 percent, the green tax from USD 6 to USD 12 and the airport development fee and departure taxes will also be raised.
Ameer denies violating the Finance Act and Constitution
During today's press conference, Ameer also denied the government's accusation that the former government had committed "errors" in maintaining the state accounts.
Attorney General Ahmed Usham said the former government had recorded finances after spending in the previous year.
He said it was in violation of the Constitution and the Public Finance Rules and that it would be investigated.
"There have been violations of Article 96 of the Constitution. There have also been violations of the Public Finance Rules. We will investigate the cases of these individuals and take necessary legal action," the Attorney General said.
Usham said the “errors” made in maintaining the state accounts cannot be ignored.
"There have been grave errors in the management of the state accounts. So we should not ignore it easily," the Attorney General said.
In response to those allegations, Ameer denied acting in contravention of the Public Finance Act and Rules.
"We have not done anything in contravention to the laws and rules in the last five years through the Ministry of Finance," he assured.
The Attorney General, the Auditor General, the Legal Department of Finance and the relevant technical staff have never flagged any action that contravened laws or rules, he added.
Finance Minister Mooa Zameer accused the former government of recording some expenditures one year late.
"The issue is actually recording disbursements related to projects during the ongoing year," Zameer said, adding that the issues were with externally funded projects.
Ameer noted that payments in donor-funded projects are entered after receiving payment advice. The current government has recorded a large payment for the Velana International Airport (VIA) project received in January in the 2024 budget, he said.
"January is also an open month for the 2023 budget. The Finance Act gives us the opportunity to reconcile the system and close the previous year's records within 30 working days. When it was recorded for 2024, this government had the choice to change it to 2023.," said Ameer, who also chairs the MDP Economic Committee.
"It has nothing to do with us. The payment advice came in January and February. They are using the Auditor General and using this as an excuse to misrepresent the information and avoid responsibility," he alleged.
